Falklands : "Have Rig Will Drill," Says Dr. Phipps
Submitted by Falkland Islands News Network (Juanita Brock) 24.02.2006 (Article Archived on 10.03.2006)
All Dr. Phipps needs now is to find a rig that will do the biz.
“HAVE RIG WILL DRILL,” SAYS DR. PHIPPS
By J. Brock (FINN)
During a brief run-down of the Geology of the North Falkland Basin in the tranches where Desire Petroleum want to do exploratory wells, Dr. Colin Phipps (CP) mentioned that the source rock was produced in the same way as it now is being produced in the Rift Valley in Africa. During an interview on Thursday morning, (FINN) asked Dr. Phipps to explain further about what makes the geology of the North Falkland Basin like that of the rift Valley in Africa.
CP: The African Rift Valley system, which runs pretty much through the hole of Eastern Africa right the way down towards Mozambique is very similar in style to the kind of rift valley structures that we are finding in the North Falklands Basin. At the time of formation the area was a part of Africa, so they started off being connected to Africa. The difference is that the structures we have in the North Falkland Basin are much earlier than the Rift Valley system we now se in Africa. And, they have been filled up the same. In Africa they are still being filled up but the structure that we had that created the source rock was a very large lake and it would have looked just like Lake Nyasa or Lake Tanganyika that you currently have in Africa. Given long enough, Lake Tanganyika, for instance, could well also provide a source rock. It’s just that the sediments out in the North are 60 or 80 Million years older than are the rocks in Africa today that are filling up the lake system. But it’s a good analogy of the kind of structure that we have.
FINN: The chances of finding oil are very good here but you said in your presentation last night that you had more of a chance of finding oil that isn’t commercially viable than a huge reservoir of commercially viable hydrocarbons.
CP: Last night I was asked, “What were the chances of finding oil?” And, I said the chances of finding oil, as such, were almost 100% because the Shell well, for instance, already found oil and it found gas. And, had it been onshore, say in the USA, it almost certainly would have been put on to production. It was good enough for that. The trouble was that it was drilled in the centre of the basin and it only entered thin, silted type sand, which means it’s got very small grains. And, the small grains mean that although it could be quite porous, it’s very difficult for oil to flow through it. There is more friction, if you like to think of it that way. The coarser the pours, the faster it flows. What we are really trying to do now is to find a reservoir of coarser sand, where the oil can flow through more easily. So rather than being able to produce 500 barrels a day, we are going to be able to produce 5,000 barrels a day. And, that’s what we need to do out in the North Falkland Basin for it to be economical. Our big task is not so much finding oil, which we know to be there. What we are now trying to do is to find the reservoirs, which will give us the productivity, which will make it economic.
It’s quite easy to have a big field with low productivity, which would be un-economic and exactly the same size of field with better productivity, which would be very economic. I should think that’s probably the last major risk we are facing.
FINN: Given last night’s presentation mentioned cooking. The drill, in the second shell well, it was said, was 2,800 metres down. I understand that hydrocarbons cook out at the deeper depths. Would you explain a bit about cooking and how it relates to the North Falkland Basin?
CP: What happens with the source rock is that the organic material, which gets laid down during the sedimentary process – as that gets deeper and deeper and as more sediments pile on top of it – two things happen. The pressure increases and the temperature increases. When that happens the organic materials start cooking. Basically it’s chemical changes, which create the oil, then the gas. The important thing is that the source rock has got to be mature for the production of oil and gas. It can be under-mature, which means it hasn’t been cooked enough – therefore oil and gas haven’t been properly formed or expelled. It can be over-mature, which means that it’s been pressed so far deep and it’s got so hot that it literally turns into black organic matter, which is solid and not liquid.
FINN: Like the pot going dry?
CP: Yes. Something like that. There is a very famous example of that here in the Islands – the Black Shale from the Devonian, which is very high in organic matter and would at one time been a marvellous source rock. But it is now semi-metamorphic rock and is over-mature. The important thing is you’ve got to have the source rock at a depth where the temperatures and the pressures have been right – not to under cook – and not to over-cook. It’s got to be mature and that is what we’ve got here in the North Falkland Basin. The upper part of it in the North Falkland Basin is under-mature but the bulk of it is mature.
FINN: Given the technology to drill down to the reserves – why is it that only the two Shell wells only generated larger amounts of hydrocarbons, and not just indicators of hydrocarbons at various depths?
CP: Shell was actually the only company that actually drilled in the centre of the basin and drilled through – indeed, only one well of theirs – drilled through the source rock, which turns out to be very thick indeed. All the other wells drilled to try and see if there was shallower oil. We did find good reservoirs but because the source rock is so thick, the oil hadn’t actually got through it into the shallow reservoirs. So, the other wells were not drilled in places where they could have found deeper reservoirs. Only the two Shell wells were drilled in that position in the sedimentary basin. Unfortunately for them, they were right in the centre of the basin where the sands were silted rather than sandy, which is now why we are looking at the edge of the basin, where we would expect the coarser sand. That is an area that has never been drilled.
FINN: The other areas where they drilled and found only indicators of hydrocarbons at various depths - why didn’t they find anything?
CP: They never got below the source rock into the main basin. They literally just went through the source rock, straight into what we call “basement,” which is metamorphic rock, like what we have here ashore on the Islands. They were drilled off the development of this “rift valley” and were drilled on the tops or the summit of the rift valley, rather than closer to the centre.
FINN: What are the chances of somebody like Shell, who have drilled here before, coming back after the oil has been found and taking over where the exploratory process left off?
CP: Whether it’s Shell or whoever, I think the chances are quite high. What is happening in the international oil industry is mirroring what has already happened in the international mining industry.
Most of the big mining companies with very large reserves found a few years ago that they were spending a lot of money on exploration and not replacing their reserves or replacing the amount they were mining. They actually stopped almost all exploration and relied upon lots and lots of small companies exploring on the basis that it didn’t matter then if there were only one in ten small companies who were successful. As soon as that small company was successful the big companies came along and either did a deal with them or took them over. This is beginning now to happen in the oil industry. A number of the major oil companies have truly replaced their reserves year by year in recent years. BP claim to have done so but really mainly because they have re-assessed some of the reserves they have already found. So those oil companies are now tending to move into the same sort of position, where they follow what the independents are doing in the smaller companies and either come in as partners or not. But that for them has the great advantage that they know that the success ratio will be almost 100% because they are coming to get something which has been discovered. I expect this trend to increase as the years go by.
FINN: In the public meeting and in the Chamber of Commerce liquefied natural gas was alluded to. What are the chances that the people here in the Falkland Islands could tap into that resource and at least get high quality diesel for use in heating systems and vehicles?
CP: This is a relatively new technology. It’s called gas to liquids. We refer to it as GTL technology. It turns gas into diesel at a very high quality – premium diesel because it doesn’t have sulphur and other contaminants in it that diesel from crude oil has. So, it actually fetches a higher price on the market. There are now a number of GTL plants around the world but they are all onshore. Clearly, if we found gas in the North Falkland Basin – and, indeed, Shell did find quite a bit of gas in one of their wells – it would be quite possible to pipe it ashore to a GTL plant here and make premium diesel. That, of course, could be available to the local market. The price would depend on the sort of tax FIG and others might want to put on it but it would certainly be available. But also there is technology being developed – the first one is in the planning stage – where they are actually putting GTL plant on a floating production system like an FPSO out in deep water, where the tankers would come and take diesel off just in the same way they would take crude oil off.
If that were to be used in the Islands, you would have to have a dedicated tanker that every now and then went out and filled up with diesel and came back here. It’s much as you have a tanker coming in now to Stanley Services every so often providing the fuels, which you use.
FINN: So, it’s not impossible to do this?
CP: It’s entirely possible – why not?
Why not, indeed? It’s up to someone here to keep an eye on the technology and get a business going. That business depends on the rig and Dr. Phipps assures us that if there is an appropriate rig available, he will use it.
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